Economists are talking about another measure of vacancies. It was mentioned that as compared to 2011, there are fewer vacant homes in most markets. Overbuilt markets like Phoenix and Las Vegas see this as a relief, while tight markets in California see it as a big challenge

In order to see if the real estate market is growing or not, vacancies on that specific market must be thoroughly analyzed. Vacant homes are usually discouraging new constructions and decrease home values in a neighborhood. The housing bubble has led to a new home construction wave. During that period the number of homes exceeded the number of people that could live in them and most of the houses remained vacant. Even more vacant homes were created when foreclosures rose and prices dropped, and individuals left or lost properties they couldn’t afford. Subsequent to that moment, the construction stopped and has remained below bubble and normal levels. For this reason, the vacancy rate dropped

In such situations, the national picture is not relevant; the local markets are those that matter. Currently, the only updated vacancy data is offered by Census Housing Vacancy Survey, a company that analyzes just a small number of homes. Thus, its information is not reliable at local or state level. Another measure of vacancies is offered by the monthly data taken from the U.S. Postal Service. Below you can see some of the results

There are increasingly fewer empty homes. The number of housing units that are occupied and that receive mail increased by 970,000 as compared to last year’s statistics. Throughout the same period, the number of properties that could get mail increased by 760,000. The difference between these 2 numbers (210,000) shows how many vacant units were reduced. On a national level, the vacant unit dropped by 5%, and now the vacancy rate is 3.4%. Another statistic shows that out of 100 big metros, 90 have experienced decreased vacancies. The biggest decline was in San Jose and the largest increase was in Akron

When the housing units are growing slower than the households, we can talk about decreased vacancies. The households’ number is strongly dependant on the employment growth and the housing units’ number is based on construction. Vacancies have declined in Seattle, Denver and San Jose because these markets have experienced strong employment growth. At the same time, markets like Phoenix, Bakersfield and Las Vegas are also experiencing lower vacancies because there are fewer constructions. On the other hand, openings increased in El Paso, because of its construction boom, and in Milwaukee, Providence and Akron, due to their slower job growth

The local housing markets are affected by the number of vacancies. Basically, open homes dictate the listed inventory of proprieties that are available on the market. For instance, because of the large vacancy declines, Seattle, Bakersfield and San Jose have also dealt with large inventory declines. Since properties are filling up, the inventories are going down. Additionally, price increases are not related to declining inventories, but to declining vacancies

On a national level, decreased vacancy rates are extremely important and necessary for the housing recovery. Still, while this decrease is beneficial for homeowners and sellers, it is detrimental for renters and homebuyers who are looking for a place to live. California, for example, has one of the lowest vacancy rates in the country, even though prices have declined. The main reason for this is the impossibility to build new houses because of restrictive regulations and geography. The housing demand is higher than the construction rate. A high vacancy rate was seen in Detroit. Here, the reasons are the job losses and the population decline

Las Vegas and Phoenix are the only markets where vacancy rates are declining and rising at the same time. These 2 can be seen as normal metros because they have little new constructions and continued household formation and population growth. They can immediately absorb vacant homes and move towards housing recovery. So, there are markets that experience a housing glut and others that experience a housing shortage. The trend is rough and for a real housing recovery, each market has to balance the construction and the household growth.